Purpose: The aim of this paper is to examine some of the challenges and opportunities to build a knowledge-based economy in Bahrain. Recent trends in development studies have focused on building knowledge capacity to foster economic growth and promote development. Bahrain has limited natural resources, and, therefore, investment in knowledge creation helps the country to compete in the global markets by producing high-tech products and manufactured goods.Design/methodology/approach: The study is a descriptive assessment of Bahrain’s initiatives using statistical data and digital indicators to analyze the process of building a knowledge-based economy.Originality/value: The paper contributes to the literature by helping students and policy makers understand the main components of the knowledge-based economy and what measures need be taken to promote such an economy. In Bahrain, as well as in the rest of GCC countries, knowledge applications allow economic diversification and job creation.Keywords: Knowledge; ICT; Innovation; Education; Skills; Bahrain